Why is this usage varaince adverse?
topcat
Registered Posts: 452
20131008_192534 by AdamSWilkinson, on Flickr
20131008_192556 by AdamSWilkinson, on Flickr
I am stuck on why the answer is £30 Adverse ? When the actual material usage cost was lower than the standard usage cost would be?
These are my workings
AQ X SP
5500 X 0.2 = £1100
SQ X SP
5650 X 0.2 = £1130
Therefore £30 F?
any help appreciated as always please
0
Comments

20131008_192534 by AdamSWilkinson, on Flickr
20131008_192556 by AdamSWilkinson, on Flickr
I am stuck on why the answer is £30 Adverse ? When the actual material usage cost was lower than the standard usage cost would be?
These are my workings
AQ X SP
5500 X 0.2 = £1100
SQ X SP
5650 X 0.2 = £1130
Therefore £30 F?
any help appreciated as always please
They used 5650 bottles to make 5500 bottles so there was some wastage of bottles ie an adverse variance of 150 bottles. The standard price of a bottle is 20p so 150 bottles x 20p = £30 adverse
Using the nps method:
AQ x SP: AQ is 5650 (ie the number of bottles used, not the number produced) x 20p = £1130
SQ x SP: SQ is 5500 (ie to produce 5500 bottles we should have used 5500) x 20p = £1100
to gives £30 adverse. You've just got the AQ and the SQ the wrong way around0 
I assume it's the bottles we're looking at? You've just got them the wrong way round.
AQ X SP = 1130 (5650 x 0.2)
SQ x SP = 1100 (1100 from the flexed budget)
Which gives you the £30Adv
The Actual quantity is the number of bottles used, not the number of units produced. The Standard Quantity is the number of bottles expected to be used for the 5500 units as per the flexed budget.0 
Snap!0

Of course what a daft thing to do! thank you both for pointing that out :thumbup1:0
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